Case Study Description of Baker Hughes: Foreign Corrupt Practices Act
In 2002, Baker Hughes was accused of violating the Foreign Corrupt Practices Act (FCPA). This case describes the actions taken by the company in response to those accusations. These include hiring a third-party law firm to undertake an independent investigation and voluntarily reviewing its entire global operations with the purpose of discovering other FCPA violations. Simultaneously, the company engaged in a comprehensive restructuring of its policies and systems for preventing and detecting the issuance of questionable payments.
Swot Analysis of "Baker Hughes: Foreign Corrupt Practices Act" written by Brian Tayan, David F. Larcker includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fcpa Hughes facing as an external strategic factors. Some of the topics covered in Baker Hughes: Foreign Corrupt Practices Act case study are - Strategic Management Strategies, Ethics, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Baker Hughes: Foreign Corrupt Practices Act casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies,
talent flight as more people leaving formal jobs, geopolitical disruptions, etc
Introduction to SWOT Analysis of Baker Hughes: Foreign Corrupt Practices Act
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Baker Hughes: Foreign Corrupt Practices Act case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fcpa Hughes, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fcpa Hughes operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Baker Hughes: Foreign Corrupt Practices Act can be done for the following purposes –
1. Strategic planning using facts provided in Baker Hughes: Foreign Corrupt Practices Act case study
2. Improving business portfolio management of Fcpa Hughes
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fcpa Hughes
Strengths Baker Hughes: Foreign Corrupt Practices Act | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fcpa Hughes in Baker Hughes: Foreign Corrupt Practices Act Harvard Business Review case study are -
Successful track record of launching new products
– Fcpa Hughes has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fcpa Hughes has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Organizational Resilience of Fcpa Hughes
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fcpa Hughes does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Fcpa Hughes is one of the leading recruiters in the industry. Managers in the Baker Hughes: Foreign Corrupt Practices Act are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Fcpa Hughes has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fcpa Hughes to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Fcpa Hughes are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Superior customer experience
– The customer experience strategy of Fcpa Hughes in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Finance & Accounting industry
– Baker Hughes: Foreign Corrupt Practices Act firm has clearly differentiated products in the market place. This has enabled Fcpa Hughes to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Fcpa Hughes to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Fcpa Hughes has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Baker Hughes: Foreign Corrupt Practices Act - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Fcpa Hughes is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Brian Tayan, David F. Larcker can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Fcpa Hughes has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Fcpa Hughes digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fcpa Hughes has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Fcpa Hughes is one of the most innovative firm in sector. Manager in Baker Hughes: Foreign Corrupt Practices Act Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Baker Hughes: Foreign Corrupt Practices Act | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Baker Hughes: Foreign Corrupt Practices Act are -
Slow decision making process
– As mentioned earlier in the report, Fcpa Hughes has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Fcpa Hughes even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Baker Hughes: Foreign Corrupt Practices Act, it seems that the employees of Fcpa Hughes don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Interest costs
– Compare to the competition, Fcpa Hughes has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Baker Hughes: Foreign Corrupt Practices Act HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Fcpa Hughes has relatively successful track record of launching new products.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Fcpa Hughes supply chain. Even after few cautionary changes mentioned in the HBR case study - Baker Hughes: Foreign Corrupt Practices Act, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fcpa Hughes vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Fcpa Hughes products
– To increase the profitability and margins on the products, Fcpa Hughes needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Baker Hughes: Foreign Corrupt Practices Act that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Baker Hughes: Foreign Corrupt Practices Act can leverage the sales team experience to cultivate customer relationships as Fcpa Hughes is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Brian Tayan, David F. Larcker suggests that, Fcpa Hughes is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High operating costs
– Compare to the competitors, firm in the HBR case study Baker Hughes: Foreign Corrupt Practices Act has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Fcpa Hughes 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Fcpa Hughes is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Fcpa Hughes needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fcpa Hughes to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Baker Hughes: Foreign Corrupt Practices Act HBR case study mentions - Fcpa Hughes takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Opportunities Baker Hughes: Foreign Corrupt Practices Act | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Baker Hughes: Foreign Corrupt Practices Act are -
Creating value in data economy
– The success of analytics program of Fcpa Hughes has opened avenues for new revenue streams for the organization in the industry. This can help Fcpa Hughes to build a more holistic ecosystem as suggested in the Baker Hughes: Foreign Corrupt Practices Act case study. Fcpa Hughes can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Fcpa Hughes can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Baker Hughes: Foreign Corrupt Practices Act suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fcpa Hughes can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Baker Hughes: Foreign Corrupt Practices Act, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Fcpa Hughes can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fcpa Hughes can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Loyalty marketing
– Fcpa Hughes has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Better consumer reach
– The expansion of the 5G network will help Fcpa Hughes to increase its market reach. Fcpa Hughes will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Leveraging digital technologies
– Fcpa Hughes can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Fcpa Hughes can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Fcpa Hughes to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Fcpa Hughes can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Fcpa Hughes can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Manufacturing automation
– Fcpa Hughes can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fcpa Hughes in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Threats Baker Hughes: Foreign Corrupt Practices Act External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Baker Hughes: Foreign Corrupt Practices Act are -
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Fcpa Hughes business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Fcpa Hughes is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Fcpa Hughes.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Fcpa Hughes will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fcpa Hughes in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Fcpa Hughes demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Baker Hughes: Foreign Corrupt Practices Act, Fcpa Hughes may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fcpa Hughes with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Fcpa Hughes in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fcpa Hughes can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Baker Hughes: Foreign Corrupt Practices Act .
Technology acceleration in Forth Industrial Revolution
– Fcpa Hughes has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Fcpa Hughes needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Environmental challenges
– Fcpa Hughes needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Fcpa Hughes can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Increasing wage structure of Fcpa Hughes
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Fcpa Hughes.
Weighted SWOT Analysis of Baker Hughes: Foreign Corrupt Practices Act Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Baker Hughes: Foreign Corrupt Practices Act needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Baker Hughes: Foreign Corrupt Practices Act is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Baker Hughes: Foreign Corrupt Practices Act is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Baker Hughes: Foreign Corrupt Practices Act is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Fcpa Hughes needs to make to build a sustainable competitive advantage.
